Northwest VCs See Existential Threat, and a Change in the Entrepreneurial Mindset

Money keeps going in, but it isn’t coming out. If you’re a venture capitalist, this is what you call a serious problem.

Innovation will go on. So will entrepreneurship. But when I spoke to a handful of venture capitalists yesterday morning about the trends in their industry, and about their role in financing startups, they were fairly candid that they need to start hitting some paydays soon, or find new strategic paths pretty quick, if they themselves are all going to make it.

This didn’t strike me as some kind of self-pity, or grandstanding act, but rather sounded more like a sober analysis of what needs to change in order for this high-risk, high-reward group to survive amid the context of all the other places where people can put money—stocks, bonds, money markets, real estate, etc. Since we’ve had VC on the brain from national and local quarterly reports this week, I sought some color commentary from three of the more active VCs in Seattle—Andy Dale of Buerk Dale Victor, Greg Gottesman of Madrona Venture Group, and Thong Le of WRF Capital.

Dale had sort of a good news/bad news take on the VC industry. On the good side, he found that 10 of the 15 members of the Evergreen Venture Capital Association made investments during the quarter, so that at least suggests they aren’t in “Walking Dead” territory, as PE Hub’s Dan Primack likes to put it. Polaris Venture Partners saw one of its portfolio companies, Woburn, MA-based LogMeIn.com, go public. Probably the most encouraging thing he cited on the Northwest investing scene came in May when the Alliance of Angels assembled a $4.25 million seed fund for startups at their most formative stages.

Then again, there was plenty to worry about. There weren’t many first-time financings, … Next Page »